PM Daily Market Commentary - 2/13/2017

davefairtex
By davefairtex on Tue, Feb 14, 2017 - 4:19am

 

Gold fell -8.60 to 1226.10 on light volume, and silver dropped -0.14 to 17.82 on moderately heavy volume. PM faded today, and a relatively modest move higher in the buck seemed to accelerate gold's move downhill.

Gold dropped early, sold off for much of the day, and when the buck topped out at 101.11 at about 10:45 am, gold made its low at 1220.30. Gold did bounce back off the lows, printing an “opening black marubozu” which the candle code found to be surprisingly bullish – 35% chance of a low. Still gold ended the day below the 9 EMA, which is bearish, and that new low is also bearish.

Open interest at COMEX for GC fell by -580 contracts.

Rate rise chances (May 2017) rose to 32%.

Silver dropped too, and the fall was similar to that of gold, however silver didn't recover quite as strongly as gold did. Candle print was a “bearish harami”, which it turns out isn't very bearish at all, with only an 8% chance of marking a high. It does look as though the 200 MA is acting as resistance. The gold/silver ratio rose +0.06 to 68.82, which is very mildly bearish.  If copper tops out, I'd expect that to weaken silver too, at least a little.

Miners fell, with GDX down -1.34% on light volume, and GDXJ dropped -1.29% on light volume too. Candle print for GDX was a spinning top/NR7, which the candle code saw as neither bullish nor bearish. That's no help as to direction. The fall in the miners took GDX below its 200 MA, but it remained above the 9.  That's bearish, but the light volume lessens the impact.

Platinum fell -1.32%, palladium moved down -1.15%, and copper rose +0.29%. Platinum has now dropped below its 200 and 9 EMA lines, while copper printed a shooting star which turned out not to be all that bearish.  Mostly, the metals had a bad day.

USD chugged higher, up +0.16 to 100.90, moving slowly towards its 200 MA. The spinning top candle print doesn't give us any information as to direction. The Euro dropped through its 50 MA and fell by -0.41%, which looks fairly unpleasant. The dollar uptrend is continuing, and the effect on gold is becoming a bit more pronounced.

Crude also fell, dropping -0.89 to 53.17, printing a bearish engulfing candle that turns out to be not all that bearish, at least according to the candle code. Oil closed the day below its 9 EMA. It looks a bit unpleasant to me, but oil has been trading in this range between 51-54 for several months now, and it always seems to find a bid when it drops materially below 52. So far anyway. Oil equities actually rallied, with XLE up +0.19%. That suggests oil may not crater.

SPX rose +12.15 to 2328.25, making yet another new all time high. Financials led (XLF:+1.14%) with industrials close behind (XLI:+1.00%), while consumer staples brought up the rear (XLP:+0.0%). The “opening white marubozu” isn't bullish or bearish.  SPX is now overbought, with RSI7=83, but so far, there is no sign that the rally is slowing down. VIX rose +0.22 to 11.07.

TLT fell -0.31%, dropping below its 9 EMA. I suspect that the rising equity market is not being kind to bonds at the moment. When equities top out, then we'll see what sort of bid bonds will receive.

JNK rose +0.11%, continuing to move slowly higher, above all 3 moving averages, and signaling risk on.

CRB fell -1.02%, dropping below its 50 MA once again. 3 of 5 sectors dropped, led by energy.

The gold-dollar inverse relationship came back today, and the behavior was fairly evident in the intraday moves; gold's bottom came right in line with the dollar top.  Since the dollar remains in an uptrend, and there does not seem to be any sign that the dollar uptrend is about to end, its likely that gold may well continue moving lower. The drop below the 9 is the second signal we've seen that gold's trend might be changing - the first appeared last week when gold printed a swing high.

I said last week that a drop below the 9 would cement a trend change. Do I still mean that? Boy I hate having my words written down. MACD hasn't yet rolled over. Today's drop didn't do the gold chart any favors. I'd say gold continues moving lower “more likely than not” and the rest of the complex will probably follow gold lower.

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